The "issuing bank," which issues your cash back or rewards credit card, has its cut protected by the payment networks. Part of the "interchange," the wholesale

The "issuing bank," which issues your cash back or rewards credit card, has its cut protected by the payment networks. Part of the "interchange," the wholesale cost of processing a payment, is reserved for paying out the issuing bank. The interchange rates are set for the payment processors by the card networks (Visa, Mastercard, Discover, Amex). Whether you spend $100 at the locally owned boutique or Costco, they get paid the same amount. The middleman— the payment processor— gets squeezed by merchants like Walmart and Costco, competing to shrink the margin for the promise of massive volume. But Chase, Captial One, etc. don't have their consumer credit card divisions affected by who processes the card. (Unless you're Citi's processing side with Costco, and only accept Visa. Then your competitors get zero volume from Costco on their mastercards, discovers, and amex cards)